Overview
The goal of this course is to understand why business in the Internet Age is different to business before the Internet. Understanding concepts like non-rivalry, marginal cost zero, network effects, network externalities, interdependencies (game theory), the role of information in value creation and value creation in networks will help the student to understand the emerging business models of Internet Age companies.
Resources and in particular the scarcity of resources has played a central role in the way traditional companies have created value. The Internet Economy seems to be thriving because of seemingly ever increasing computing power and communication capacity (following Moore´s Law). Instead of a scarcity of resources the Internet economy seems to thrive from an abundance of resources. One key new resource is data.
An earlier title of this course was inspired by Alvin Roth and his book ”Who gets what and why” . The fundamental idea is that markets can be designed and internet technologies can be used to enable the seller to find a buyer. The goods are to a large extent digital and services are built by combining digital and physical goods into services. We have come a long way from the physical market represented by the market square at the center of the village.
The emergence of the internet economy can be seen as interaction between the user, a business and society. This is adapted from the framework of Laudon in his book eCommerce, which builds on three steps: the technology, a company and society.
Course content chapter by chapter
In the course I build from my experience, I try to include cases and stories to aid understanding, but above all I build also from an understanding of theory. I build from an understanding of the economic character of information, inter dependencies (game theory) and networks. This is an understanding which I have found to be both of huge interest and of a lot of value, when trying to implement change in practice.
The first five chapters will give you a theoretical understanding of the internet economy including an understanding of what a market is and how markets emerge.
Information has some very interesting properties. In the first chapter ”Earning with information”, we will discuss some of these properties. Be warned some of the characteristics of information and in particular the implications of these characteristics might challenge some of your deeply embedded beliefs. You will possibly need to question at a very fundamental level some of the ideas you hold to be true. For this reason I have a slightly over populist way to express myself. The sole purpose is to help you understand and encourage you to question the surrounding world and study the arguments further. I root my arguments in academic literature.
The skill of vicarious thinking is important. We live in a world in which it is not only our decisions that matter but also what others will do. There is a structured way to think of these inter dependencies. It is known as game theory. I will in the second chapter discuss some simple examples. If this is the first time you are introduced to game theory, it might take some practice to master the way of thinking even though I have tried to keep the examples at a basic level.
In the third chapter we will discuss networks. The most simple way to measure a position in a network is to count the amount of friends one has (known as degree measurement). Most of us stop there. We rarely think about other ways. However, there are a huge variety of other ways to also measure position and characteristics of networks. I will introduce you to some. Businesses locate themselves into networks with other businesses. In these environments value creation, value division and value capturing become important and are essential to understanding why some businesses succeed and others fail..
The internet is a huge network. One of its key features is that it is a very connected network. We will discuss characteristics of this connectedness. In particular we will talk about the the myth of six degrees. The connectedness of the internet, the availability of both computer capacity and transmission capacity, has changed the fundamental business logic of many businesses. We will discuss the phenomenon of the Long Tail in the connection of web-commerce and issues dealing with the reorganization of rights.
The next step is to discuss what markets are and how they emerge.This we will do in the chapter I have named ”Markets”. The purpose here is that the course participant will look at markets from the market perspective and not from the perspective of an individual actor (e.g. company) in a market.
Once this market perspective has been achieved, I encourage the course participant to move back to the individual actor perspective and with this I mean the perspective of e.g. a start up company acting in the market or that of the incumbent trying to implement change in a market. For this reason I have titled the chapter ”creating new markets”. The idea is that the actor (e.g. the start up) is also an active player in redefining the marketplace and also in possibly creating a new market place.
The Business Model Canvas (Osterwalder & Pigneur) is a great tool to put all the pieces of this course together. You might also want to look at Strategyzer.com . In Particular the business model canvas is great when one designs a business model or when one decides to test out a new possible change in the present business model. In a business model all the pieces of a company have to fit together and one has to be careful not to give away for free something which is core to keeping the business intact. In many case when working with business models you will for example need to understand the connection of daily tasks to the core business model of the company. The Business model canvas however is not the best possible tool to understand the business model of an existing company. The Business Model Navigator (Gassmann, Frankenberger, Csik 2014) is an interesting approach to understand the business models of existing companies.
The Digital Landscape 